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May 05, 2006

Goldman Sachs Invests $30 Million in Iogen

Iogen Corporation announced May 1st that Goldman Sachs & Co. has invested $30 Million (CDN), ($27 million US) in its renewable cellulose ethanol technology. Iogen operates the worlds largest pilot/demonstration plant that makes cellulosic ethanol.

Goldman Sachs' investment gives it a minority stake in Iogen, the only company to be operating a demonstration facility that converts agriculture materials like straw, corn stalks, and switchgrass to ethanol. Goldman Sachs joins the Royal Dutch/Shell Group as a major investor. The funds will be used to accelerate Iogen's commercialization program.

Iogen owns and operates a 10-acre, fully integrated enzyme and cellulose ethanol manufacturing facility located in Ottawa, Ontario, Canada. This complex houses research and development, engineering, manufacturing and quality control. At full capacity Iogen's demonstration plant is designed to process about 40 tonnes per day of feedstock, and to produce 3 to 4 million liters of ethanol per year. The plant uses wheat, oat, and barley straw as raw materials.

As to the price of cellulosic ethanol, the Iogen website makes this comment: Currently production is done in demonstration quantities, therefore the price per liter is higher than it will be in a commercial facility. Cellulose ethanol will be competitive with grain-based ethanol from a cost perspective. As more cellulose ethanol plants are constructed, the cost of cellulose ethanol will come down and is expected to be competitive with the price of rack (pre tax) gasoline.

Red Herring quoted Rona Fried, president of SustainableBusiness.com as saying, 60 billion gallons of ethanol fuel could be made each year from crop waste, wood, grass, and other plant fiber.

Working with its partners, Iogen is investigating three potential sites for a commercial prototype plant which Iogen will own and operate with its partners. Iogen conducted an in depth study of North America and Europe high-yield areas for agriculture residue to help it site its first commercial plant. A short list from that study includes North Central Saskatchewan, East Central Alberta and South East Idaho.

Iogen will need more financing to build a commercial plant, which it aims to begin building in September 2007. If Iogen reaches this goal it will begin producing ethanol 18 to 20 months later, in the spring of 2009.

Established in the 1970s, Iogen Corporation has become one of Canada's leading biotechnology firms. Iogen is an industrial manufacturer of enzyme products with a focus on products for use by the pulp and paper, textile and animal feed industries. It also is the world leader in technology to produce cellulose ethanol, a fully renewable, advanced biofuel that can be used in today's cars. Iogen employs a staff of approximately 180 people, with over half involved in research and development, and engineering; one fifth in manufacturing; and the balance in sales, marketing, and administration.

Comments

Since the transportation costs of the feedstock, straw, corn stalks, switch grass, etc, will tend to be high relative to its value, I imagine that the future of cellulose ethanol plants will be in small, decentralized facilities located near their source of supply. I just don't see the economic feasibility of trucking huge bundles of corn stalks far from the fields in which they are grown. How this will impact the economies of scale I do not know. Moreover, since the production of feedstock, especially in Northern regions, will tend to be concentrated in a small portion of the year, I see a need for storage of thousands of bales of stuff somewhere. It might be better for the plant to run 24 and 7 during the "harvest", and cut back or shut down during the slow months, but then they will need to store large quantities of ethanol somewhere. (not to mention the underutilized capital goods.) I think this whole idea has a lot of problems to work out.

Iogen has been developing the process for over 10 years.
They are very well aware of location factors necessary to make this commercially viable. I think what you will see is that their pilot plant (which does not have much room for more expansion) will be scaled up for commercial facilities located close to a source of raw material. Keep in mind, there are huge logistical hurdles with the existing petrolium resource extraction process that we pay for too.

Every new technology faces hurdles. But Goldman is betting $27 M that they can be overcome. Not sure if it's coincidence, but Goldman's CEO, Henry Paulson, is a big time Republican, and a big time environmentalist. He recently donated $100 million to conservation and has come up as a possible successor to Secr. Snow at the U.S. Dept. of Treasury.

The big problem with cellulosic ethanol is that it extracts too much carbon from the soil and releases it as CO 2 into the atmosphere.

In order for a healthy soil ecosystem to exist that provides a carbon sink and does not need fossil fuel based fertilizer, that cellulose in crop waste, needs to be returned to the soil.

As well as natural fertilizer from the waste stream, either from manure or green manure crops that build up nitrogen levels in the soil.

Another mega dust bowl event is right around the corner given the chemical agricultural destruction of the soil and stronger storms due to global climate change. And loss of soil as a carbon sink causes much of that global climate change.

There is no free energy lunch in cellulosic ethanol. The fossil fuels used to produce the cellulose and process it make thiis process even worse as far as climate changing CO 2 emissions are concerned.

The destruction of water resources are an absolute limit to chemical agriculture. Water is the oil of this century and trading it for liquid fuel from chemical farming will not work. As soil ecosystems fail so does our groundwater.

This investment shows that many who think they are helping the environment do not really understand the effect of chemical agriculrutal fuel farming on global climate change.

The recent breakthroughs in battery electric vehicle technology and renwable electric power generation make liquid fuel farming uneconomical as well.

There is no way it could ever compete on a level playing field with renewable elrectric transportation, only huge subsidies in the form of agribizz corporate welfare make it feasible.

This investment shows how capital is misdirected in our economy. The monopoly control of access to capital and the collusion by government officials are leading this planet to the brink of disaster from war over scarce fossil energy and the global climate disaster that results from gossil enerrfy and schemes like this cellulosic ethanol fuel farming.

Even Bill Gates is being conned into supporting fuel farming now. One would think that people like Gates and Paulson would see through this scamming, but apparently they work on filtered information trickled to them in their bubble boy-like isolation from reality as does our president.

After suffering through yet another one of your countless posts, amazingdrx, I have come to the conclusion that, if your knowledge could be expressed as a number, it would be a large number. The only problem is that it would be a negative number. Plants get their carbon from the atmosphere, not the soil. It is part of the process of photosynthesis. Having started your post with an "anti-fact", everything else that follows is garbage, as per usual.

Since the transportation costs of the feedstock, straw, corn stalks, switch grass, etc, will tend to be high relative to its value, I imagine that the future of cellulose ethanol plants will be in small, decentralized facilities located near their source of supply.

There are a number of agribusinesses where, due to this and similar considerations, field production must be coordinated very closely with factory operations. Sugar (both beet and cane) comes first to mind. In general, managers and growers arrange tight harvest and delivery schedules, and it works out.

Grasses, that can be mowed multiple times per growing season, with some flexibility in the exact timing, and at the end of the growing season, left baled or stacked in the field for later delivery, seem particularly amenable to this kind of management, if necessary.

Natural prairie soil, for instance, is 58% carbon. That is CO 2 from the air converted through photosynthesis to cellulose that has returned to the soil as the plants die.

That is how natural or organic farmed soil provides a carbon sink. By taking the cellulose that is grown and turning it into ethamol, it is vurned, releasing that cO 2 into the air.

All natural soils, as in jungle, rain forest, prairie that is turned into chemical agriculture loses that carbon that is stored in healthy soil. A prairie builds up carbon in the soil year after year, deeper and deeper. Mist of that rich soil was plowed and exploited decades ago.

What's left is inert, fossil fuel derived chemicals are added to grow crops. Since almost nothing organic is put back,specifically cellulose from crops and nitrogen from manure, it is destroyed as a carbon sink.

This is how chemical fuel farming adds to global climate disaster. As ethanol is used for furl, Brazilian rain forests are burned off to grow sufar cane with gossil dertilizert and herbicide, insecticide monocrops. That destroy groundwater as well.

Switchgrass as fuel stock is the same, it is not grown organically and creates the same problems. It strips the soil of organic matter, that is the way soil stores carbon.

In natural ecosystems, most of the carbon sequestered by plants is returned to the atmosphere by microbes once the plants die. The inventory of not-yet decomposed organic matter in soil is generally on the order of a few percent, the exception being wetlands, where waterlogged soil impedes decomposition, and soil organic matter can be 20-30%.

I don't know where amazing got the 58% number for prairie soil, but it is simply wrong.

Excellent post, Robert. You captured the obvious facts that I missed. Bailed cellulosic matter can be left in the fields for months, if not for years. I don't imagine that its value will be degraded much by becoming "stale" That way, processing can be spread throughout the winter months until fresh produce can be bailed in the spring. That lowers the capital cost for equipment. Good point.

The study amazing cites says that carbon is 58% of soil organic matter, not 58% of soil. In most soils, soil organic matter is at most few percent of soil. It can be important for soil structure and moisture retention, and for the health of soil microbes, but is only a minor stream in the global carbon balance.

Or look at it this way: if we burn hundreds of years of stored biomass each year as fossil fuel, and known fossil fuel reserves (chiefly coal) would last 100-200 years at present consumption rates, then about 100,000 years worth of biomass are stored in the form of fossil fuels. But these fuels took 100,000,000 years to form: clearly, fossil fuel formation is a very minor part of the global carbon balance.

In most soil destroyed by chemical agriculture that is true, not in the prairie soil in that study. Or in soil that is organically farmed.

But that's my point.

The main way that CO 2 is removed from the atmosperic system is photosynthesis. If the biomass holding that CO 2 is burned as fuel rather than returned to the soil, that soil does not act as a carbon sink.

Since the advent of chemical agriculture, where ever it occurs, that carbon sink has been destroyed, contributing to global climate change.

If switchgrass or other cellulosic ethanol crops are grown on more land, more of the carbon sink will be destroyed.

Game over, you lose. In fact, with any fuel farming we all lose. To the tune of trillions in agribizz fuel farm subsidies for internal combustion engines at 14% efficiency to burn up planet earth.

And 100s of trillions in costs due to global climate disaster. Katrina's costs alone are up to 2 trillion now. How many Katrina sized climate related disasters will it take before you all wake up?

amazing: Most of the persistent carbon in prarie soil comes from annual root turnover. Unless you are harvesting switchgrass plants whole (something I would like to see just once)you are still going to have significant carbon inputs from a switchgrass system as it is a perrenial crop. There is no reason such a system cannot be sustainable unless (as I suspect) your definition of sustainable is so constricted as to exclude all mechanized agriculture.

There are a lot of waste products out there that could be converted to fuels - it would not replace all fossil fuels, but could offset some. An example: I am a forester (and plant pathologist), and spent two days last week burning slash piles. I'm not sure how many tons of CO2 I put into the sky - I burned nine house-sized piles of waste in order to alleviate fire hazard after logging. Sure would have loved to have seen something useful done with all that slash.

Oh - and just so you know, There was plenty of slash, snags and coarse woody debris left on-site for wildlife and soil health. As for carbon sequestration, what do you think a 2x4 inside a wall is?

So, people seem to be pretty on top of this here (and by this, I mean refuting Amazing's statements about carbon content), I thought I'd back-up APlantPathologist with some hard numbers:

Farming switchgrass actually improves the carbon content of the soil, especially on farmland, as a significant portion of the plant matter is contained in the roots which are not harvested (like APlantPathologist mentioned, I'd like to see you try that!).

This study on cellulosic ethanol production from Argonne National Labs reports that the soil organic carbon content of fields under switchgrass cultivation actually increase between 22,000 and 30,000 kg per hectare per year and also see "a significant improvement in avtive soluble organic carbon (SOC), which is used as an indicator of changes in soil quality" (p. 5).

The authors go on to write, "Assuming that 39% of switchgrass is cultivated on cropland and the remainder is cultivaed on pastureland and other sources [read: Amazing's Great Plains praire], we estimated equilibrium soil carbon sequestration (per unit of biomass) at 48,800 grams (g) of CO2 per dry ton (dt) of switchgrass" (p. 5).

The same can be said for woody biomass energy crops - i.e. hybrid poplars and willows - as the root structure also stays in the soil and sequesters carbon.

So: didicated biomass energy crops like switchgrass are actually good for the soil and sequester carbon.

"Together with the amount of carbon contained in the harvested switchgrass and remaining root, these changes lead to a net CO 2 sequestration"

So most of the 48,800 g of CO2 per dry ton is contained in the harvested part of the switchgrass, not the roots. That part that is intended to be turned into fuel, and be burned, releasing the CO 2 instead of sequestering it.

No free lunch here, sorry. The lets pretend combustion is sequestration argument for biofuel farming is not a sound one.

Furthermore the study states that the switchgrass will be grown with herbicides and chemical fertilizer (derived from oil and natural gas)which destroys any organic matter stored in the soil, that leaves the roots alone to account for a carbon sink. How much do the roots grow each year? How much carbon do they store?

Those stats are conveniently left out of this study. Science with conslusions for sale is not science, it's propaganda.

The reputed sequestration increase when switchgrass is grown on cropland is understandable, since chemical ag cropland soil contains hardly any organic matter. Growing switchgrass and letting it die and feed the soil would naturally increase the carbon content of the soil, as would any plant matter.

But taking the cellulose formed by photosynthesis and turning it into combustible fuel negates that sequestration.

Turning so-called waste products into fuel takes organic matter away from the soil ecosystem, a natural carbon sink of immense proportions. That is utterly destroyed by chemical agriculture or slash and burn "forestry".

It seems that the main point the amazingdrx is having trouble with is what happens to the carbon contained in the above ground portion of the plant when it is not harvested. A very small portion of the carbon does go into the ground to be sequestered but it's minuscule. The vast majority returns to the atmosphere through the process of decomposition.

As far as the carbon cycle is concerned, converting the above ground biomass material to ethanol and then combusting it is a diversion before it returns to the atmosphere.

To follow up on Darrell's point, the other important factor is that the harvested portion goes to offset releases of truly long-term reservoirs of carbon such as hydrocarbons and coal (which mainly accumulated in swamps, peat bogs, and other places where high production meets low decomposition, not prarie soils as amazing seems to think).

If you want to create a carbon reserve, fine but there are less economically obtrusive ways of doing so than converting a huge portion of our most productive cropland into prarie. We could gain some great things environmentally by integrating fuel crops into our present system. Imagine how water quality would improve in the Mississippi river system if all streams were buffered by a 100 or 200 foot wide swath of switchgrass between the chemically intensive row crops and the natural riparian vegetation. Millions of tons of fertilizer would be taken up by the switchgrass each year and the dead zone in the gulf would no longer be dead.

Heck, out here in Utah we could just send wood waste by rail to the Kennecot copper mine in the west desert and bury it under their tailings - now that would be some serious sequestration.

quick clarification... with regards to using perennial grasses for ethanol production.

the plant will store approximately equal amounts of the carbon it assimilates from the atmosphere above and below ground. so when the portion above ground is harvested, converted to ethanol, burned and returned to the atmosphere this constitutes a neutral carbon balance as the other half of the carbon is stored below ground.

this is a heck of a lot better than the current practice of burning fossil fuels, which involves zero sequestration in production methods.

fuel farming could be OK if it was done with perennial crops that sequester carbon in their rootmass. using organic matter from the general waste stream emanating from human systems (such as forestry, sewage treatment, etc.) is also good. the use of straw from barley, oats, etc. is alright for biofuels because this portion takes a very long time to biodegrade and so would not contribute to soil carbon in an efficient manner. there are other methods, like cover cropping, to achieve that end.

apart from fuels this biomass can be used to make biodegradable cutlery and compostable cups, plates. of course we should probably be using reusable items that are washable and then the water can be treated and reused within the system.

i would like to raise a few concerns about biofuel production and that of the immense water requirement for each unit of ethanol. secondly, there needs to be a clear distinction between carbon neutral fuel farming and those that are actually contributing to global warming because of the use of petroleum-derived fertilizers, deforestation, and excessive transportation of the resulting ethanol.

okay, done. hope that helps... it sure helped me to express it in order to understand the idea better myself.

The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.